Yatra Online IPO to open today: Here's what the brokerages say about issue, valuations

The Rs 775-crore initial public offering (IPO) of Yatra Online kicks off for bidding on Friday, September 15. The third largest travel services provider in India has decided to sell its shares in the price band of Rs 135-142 per equity share, with a lot size of 105 equity shares and its multiples thereof. The three-day bidding concludes on Wednesday, September 20.

The primary stake sale including a fresh sale of equity shares worth Rs 602 crore and offer-for-sale (OFS) of 1.22 crore equity shares aggregating to Rs 173 crore by its promoter THCL Travel Holdings Cyprus and selling shareholder Pandara Trust- Scheme I. It also undertook a pre-IPO placement of Rs 62 crore via rights issue allotting over 26.27 lakh shares to THCL Travel Holdings Cyprus.

Incorporated in 2005, Yatra Online provides information, pricing, availability, and booking facilities for domestic and international customers. The company provides domestic and international air ticketing on Indian and international airlines, as well as bus ticketing, rail ticketing, cab bookings, and ancillary services.

A day before its IPO, Yatra Online mopped up Rs 348.75 crore by allocation of 2,45,59,860 equity shares at a price of Rs 142 per share to 33 anchor investors including Morgan Stanley, Goldman Sachs, Societe Generale, BNP Paribas Arbitrage, Elara India Opportunities Fund, Whiteoak Capital, Quantum-State Investment Fund and various domestic mutual funds and insurance firms.

The company intends to utilize the net proceeds from the issue towards the funding of strategic investments, acquisitions, and inorganic growth; investment in customer acquisition and retention, technology, and other organic growth initiatives; and general corporate purposes.

Yatra Online has over 94,000 hotels and homestays contracted in approximately 1,400 cities across India as well as more than 2 million hotels around the world. The company is India's largest platform for domestic hotels. The company's clientele includes both B2B and B2C customers.

For the financial year ended on March 31, 2023, Yatra Online reported a net profit of Rs 7.63 crore with a revenue of Rs 397 crore. The company had incurred a net loss of Rs 30.79 crore with a revenue of Rs 218.81 crore in the previous financial year ended in March 2022.

The company has reserved 75 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the offering. Remaining 10 per cent of the offer shall go to retail investors.

SBI Capital Markets, DAM Capital Advisors and IIFL Securities are the book-running managers to the issue, while Link Intime India has been appointed as the registrar to the issue. Shares of the company are likely to be listed on both BSE and NSE.

Anand Rathi Shares & Stock Brokers
Rating: Subscribe for long-term
Yatra Online is a one-stop destination for travel information, pricing, bookings, and more. The company offers a wide range of services, including domestic and international air ticketing, bus and rail ticketing, cab bookings, hotel reservations, and ancillary services, said Anand Rathi Shares & Stock Brokers.

The company is valued at P/E of 219 times while on marketcap/sales it is valued at 5.8 times post issue of equity shares on FY23 basis. Therefore, we believe that for Yatra there is a scope of business improvement on the back of industry tailwinds, brand recall and business scalability, resulting in expansion of EBITDA margin from here on, added with a 'subscribe for long term' rating.

StoxBox by BP Equities
Rating: Subscribe
"With the growth in the tourism industry, we expect the online travel market share (OTA) to increase faster than captive players, improving the company's profitability. With the company posting profits in FY23 and strong revenue growth in the past, we remain positive on the company from a medium to long-term perspective," said StoxBox with a 'subscribe' rating for the issue.

Ventura Securities
Rating: Subscribe
Yatra is leveraging its existing network of corporate clients to potentially fuel its B2C business growth. This involves enticing them with loyalty programs, eCash incentives, and enhancing product features to encourage personal travel usage. It is successfully entering the freight industry by capitalizing on its existing capabilities, securing a valuable first-mover advantage, said Ventura.

"It is focusing on organic growth within the corporate client sector by bolstering backend systems and integration technology. This strategic move aims to expand profit margins and capture a larger share of existing clients' spending. It is pursuing inorganic growth through acquisitions, specifically targeting client acquisition and expanding into Tier II & III cities," it added with a 'subscribe' tag.

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